Competition

How About Those Cheap Canadian Drugs, Eh?

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Photograph courtesy Lexi Rydberg/flikr

America likes its drugs. This year, Americans will spend over $300 billion on prescription medications and the costs have been rising for sometime. For those who suggest that price controls are the answer, however, new evidence would suggest otherwise.

A recently published study from Fraser America compared individual spending on prescription drugs in both Canada, where the government controls prices, and the United States, in which pharmaceutical companies operate in a much freer market. Contrary to popular belief, the study found that Canadians and Americans spend a similar amount of their personal disposable incomes—and, in the aggregate, as a percentage of gross domestic product—on prescription medication.

Due to a government imposed price ceiling on name brand medications, Canadians pay 53 percent less than Americans. Because the price of generic drugs in Canada is not subject to market forces, however, those drugs are 112 percent more expensive. As the Fraser America study reports:

Our research shows that government interference in the prescription drug market in Canada leads to distortions affecting prices and supply, and does not produce personal affordability advantages for consumers (on average). People in Canada spend approximately the same share of their income on prescription drugs as people in the United States, where the supply and prices of prescription drugs are generally determined by market forces.

Moreover, research indicates that government interventions, such as price regulations, negatively affect economic incentives for businesses to invest in innovative medicines. Unlike Canada, the United States is a global leader in the production of innovative medicines because it has the appropriate incentives in place to encourage private investment in scientific research and development.

Thus, not only does government interference in the prescription drug market offer no personal affordability advantages to consumers, but it also deters private investment in the development of ground-breaking medical innovations.

The cheaper price of generic drugs on this side of the border has important implications for taxpayers. Another study found that state Medicaid programs can save significant amounts of money if they make it easier to switch patients to generic drugs, after the patents expire on the name brand medications. According to The Boston Globe:

In the study appearing in this month's Health Affairs, Dr. William Shrank of Brigham and Women's Hospital led a team from Harvard, Mount Sinai School of Medicine, and pharmacy company CVS Caremark that looked at what happened when the patent for Zocor expired in 2006 and generic versions of the cholesterol-lowering statin became available. In states that did not require patient consent for substituting simvastatin for Zocor, 98 percent of prescriptions were filled with the generic drug. In states that did require patient consent, less than one-third of the prescriptions were filled with the generic drug.

Medicaid programs nationally could have saved $19.8 million dollars if they all had generic-substitution policies that did not need patient consent, the authors conclude. Once Lipitor, Plavix, and Zyprexa go off patent in the next few years, the savings could total $100 million nationwide for Medicaid programs if policies did not require patient consent, the authors estimate.

Or were you thinking about those other cheap Canadian drugs?

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  1. Studies put out by the Fraser Institute are always reliable because it has absolutely no ideological axe to grind.

    1. Max will never attempt to refute the substance of an article, preferring to stick with ad-hominems.

    2. The Fraser Institute study is full of shit. The bad news? Since it is funded by the drugs companies, they are charging Americans 50% more for their bullshit.

      1. The previous post was brought to you by PhRMA, who brought you the Patient Protection and Affordable Care Act, which provides you with government dollars to buy our member companies’ products.

    3. Max doesn’t have an ideological axe to grind. Move along, people.

      1. It’s okay when WE do it! Fuck you christofags!

        1. Holy Fuck. Christofags? Know you audience Maxipad. I only go to church when somebody drags me there kicking and screaming (usually your mom after myself and Warty sodomize her in sucession after chugging Ye Olde English). Even then I usually fall asleep with a porno magazine unfurled in my lap for the three year-old in front of me to stare at in horror. Go to a Fox News forum if you truly seek “Christofags” to fellate.

    4. Time to put out yet another help wanted ad for a messenger.

  2. Perfect, soon you will have Canadians driving into the USA to get generics, while their American peers are driving into Canada to get brand name meds.

    1. Why do you hate increased Medi-Tourism? Thems JOBS baby, JOBS!

  3. One negative point about drugs falling out of patent. The drugs comapnies discovered a loophole that allows them to double the patent length by “reformulating” the drug. All they have to do is come out with a delayed release formulation, take the old drug off the market, and it counts as a new patent. So they’ve effectively increased patent length to 14 years instead of 7.

    1. Damn them for making products that help people. Damn them to hell!

      1. So they should have different rules than other people who make products that help people?

        If you want to make the argument that everyone who creates a new product should get 14 year patents, fine – make that arguument. What I’m objecting to is that they essentially get different treatment than other people/firms that create products.

        1. Last time I checked, my patents are good for 17 years. Do drug companies get reduced patent length due to some arcane twist of patent law?

          1. My mistake. They are 17 + 17 or now, 20 + 20 years, and due to the Hatch-Waxman Act, they get additional time to compensate for the length of the FDA trials (that part I can understand).

            1. Just wondering. Pharma IP law is it’s creature, and I’ve never had to pay attention. Regular patent law is bad enough.

              When your trials can take 10 years, it only seems fair to grant you extra time for jumping through the hoops. But I still have issues agreeing with anything done by Hatch & Waxman working together.

          2. your patents receive public funding?

            1. What DOESN’T get public funding anymore? I’m getting $0.000372 from Uncle Sam for making this post.

    2. But couldn’t a generic manufacturer still make the non-reformulated drug when its original patent expire?

  4. Zyprexa has generated a lot of bad press,criminal charge and fines for Eli Lilly and they still have unresolved Zyprexa settlement claims in the USA.

    Zyprexa caused death and damage for many patients myself included.-Daniel Haszard Zyprexa whistle-blower

    1. Or maybe you’re just paranoid.

      1. Give him a break. He’s upset about his death Zyprexa caused. You’d be peevish, too.

        1. But it was approved by the FDA! How could anyone possibly have a bad experience with an FDA approved drug?! They are the government so they only do good!

        2. Wait, he’s hallucinating that the medication caused his death? Maybe he should be mad because the stuff doesn’t seem to work.

        3. Maybe he just died in The Matrix. Oh wait, if you’re killed in The Matrix, you die here?

          1. As long as the Reason servers remain, we are immortal, sage. For good or for ill…

  5. Instead of responding to arguments, I’m just going to dismiss my opponents as lying statists. After all, if they receive money from the government in any way, they must be arguing in favor of increased government power because of the subsidy. This makes my life so much easier! Thanks, Max & Faith G! You lying statists!

  6. Or maybe you’re just paranoid.

  7. Or maybe you’re just paranoid.

    1. Are you sure?

  8. I buy my dad’s heart medication in Spain and get a free trip to Spain out of it. Cheaper than buying it in Florida.

    We need some imaginary property (IP) reform here. Artificial monopolies are ridiculous.

    1. Another red-blue blind spot. Liberals insist that prices be forced down through legislation, and conservatives insist drug companies be allowed to milk their government-granted monopoly power for all it’s worth.

      But neither ever challenge the existence of patents in the first place.

      1. But neither ever challenge the existence of patents in the first place.

        Well, patent protection is mentioned in the Constitution, if not using the word “patent”.

        1. If the Constitution told you to jump off a bridge, would you do it?

      2. If it weren’t for the existence of patents, none of these drugs would exist in the first place.

        1. On the other hand, just imagine all the research that could’ve been done had all that money not been spent on spent on patent lawyers, lawsuits, etc. [1]

          Works Cited
          Cole, Julio H. Patents and Copyrights: Do the Benefits Exceed the Costs?

  9. Wouldn’t the whole patent system be the original market distortion? Each interference beyond that is just more on the dog-pile.

  10. Another way to save is through Together Rx Access. Together Rx Access, sponsored by many of the nation’s leading pharmaceutical companies, is a free prescription savings program that helps hardworking Americans gain access to immediate and meaningful savings on prescription products right at their neighborhood pharmacies. Since its inception in 2005, Together Rx Access has enrolled nearly 2.5 million uninsured individuals. And, card users have saved over $105 million on their prescription medicines. Nearly 90% of uninsured Americans are eligible for the Program. To learn more, determine eligibility, and immediately enroll, visit http://www.TogetherRxAccess.com or call 1-800-966-0407.

    Additional resources about Together Rx Access also include:
    * Together Rx Access on Twitter: http://www.twitter.com/TRxA

    Just wanting to pass this info along.
    Leigh

  11. You can buy them with total confidence and get the same quality you get from brick and mortar pharmacy because they are completely safe.

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